India Imposes Additional Measures to Detect Improper LC Documents

In a move to curb use of ante-dated LC documentation to circumvent Indian law banning wheat exports, India’s Directorate General of Foreign Trade (DGFT) issued a Trade Notice on 30 May 2022 imposing additional checks on LCs and related documentation.

The notice informs that Regional Authorities of DGFT (RAs) “will do a physical verification of all LCs, whether already approved or under process and for that if necessary, help of a professional agency may be taken. While doing physical verification, validation/endorsement by Recipient Banks may be ensured.”

The notice also states:

“Further in cases where the LC date is on or prior to [13 May 2022] but the swift message / message exchange date between the Indian and Foreign bank is after [13 May 2022], RAs may conduct full investigation (if required, through external experts) and if these are found to be ante-dated, immediate proceedings under FT (D&R) Act, 1992 needs to be initiated against the exporter. … In case of complicity of any Banker in cases where ante-dating is established, necessary proceedings as per law will be initiated.”

Applications for a required Registration Certificate (RC) that are found eligible for approval following physical verification of the LCs by the RAs would then go through another layer of checking and approval before an RC would be issued to an exporter.